We all know that the last five years haven't exactly been smooth sailing for the housing market. And even if you weren't completely tossed overboard, chances are you got a little wet.
Perhaps your home has lost value over the last few years, making it difficult to refinance. Or maybe you've been shying away from buying a new home until the market is more stable. Whatever your situation is, we have good news about the months to come. Several indicators suggest that 2013 will usher in an increased level of home purchase loan activity.
In fact, in December 2012 the Mortgage Bankers Association (MBA) forecasted that new mortgage loan originations would be 17 percent higher in 2013 than they were in 2012.
Still unsure about testing the waters? We spoke with some experts who say these following signs are pointing to an uptick in mortgage activity this year.
Sign #1: Falling Unemployment Rates
In late 2012, the U.S. Bureau of Labor Statistics reported a 7.8 percent unemployment rate - which is the lowest rate the country has experienced for any month since January of 2009.
"As employment numbers improve, and household formation increases, we should see more buying activity in the housing market," says Rick Sharga, the executive vice president of Carrington Mortgage Holdings, LLC.
Not only is the overall employment rate improving, Becky Walzak, a mortgage expert and president of Looking Glass Group, notes that there are other job-related trends that may contribute to increased mortgage activity in 2013.
For example, Walzak says workers who received additional education and training during the recession have since been able to find jobs suited to their new education levels and skills.
Sign #2: Increases in New Home Construction
According to the National Association of Home Builders (NAHB), higher rates of builder confidence and new home construction also suggest that this will be a strong year for mortgage activity on new homes.
How exactly does the NAHB gauge builder confidence? They use a measurement called the HMI (Housing Market Index), which they determine by polling builders of single-family homes and asking them to rate their sales expectations and measure their prospective buyer traffic.
In December, the NAHB reported that the HMI had reached 47 - which is the highest and most positive level we've seen since April of 2006. The index runs from 0 to 100.
And this builder confidence matches up with NAHB predictions, which forecast that the construction of new single-family homes would show a 21 percent increase from 2012. For multi-family homes, the association forecasted a 16 percent increase in new home construction.
The good news doesn't stop there - the organization also expects these increases to continue into 2014.
Sign #3: Rising Home Prices
Although it might seem a little counterintuitive, Sharga says an upward trend in home prices could create a greater sense of urgency for home purchases.
And statistics show prices are on the rise, since the National Association of Realtors® (NAR) recently reported that median home prices for existing homes rose 10.1 percent from November of 2011 to November of 2012.
"Home prices are forecast to increase between 3 to 5 percent nationally in 2013, providing an incentive for prospective home buyers to get off the sidelines and into the market," Sharga says.
Of course, there are several factors that are still holding would-be buyers back - most notably stricter loan-qualifying standards and an economy that remains in recovery. Even so, housing experts' projections and forecasts suggest that we can expect to see more prospective homebuyers diving back in this year and, hopefully, reporting that the water's just fine.
Sign #4: Mortgage Rates are at Historic Lows - But are Also on the Rise
Homebuyers who secure lower mortgage rates will shell out less money in interest over the lifetime of their loan, so periods of low mortgage rates tend to be attractive for homebuyers. And with rates still hovering around historic lows, mortgage activity is sure to boom.
But the Mortgage Bankers Association predicts that rates are on the rise.
In fact, while rates were at 3.60 percent on March 19, 2013 for 30-year fixed-rate loans, the MBA predicts interest rates for the same loan term are likely to reach 4.4 percent by the end of the year.
And while lower interest rates will make buying a home attractive for some, rising interest rates could signify a more stable economy - and as a result, more mortgage activity.